SK Innovation breaks records, pays dividends

SK Innovation broke records last year not only with its revenue and operating profit, but also with its largest-ever dividend payout to investors.

Ironically, Korea’s biggest oil refiner relied on its non-refining operations, including production of chemicals and lubricants, to achieve a record performance.

SK Innovation on Wednesday announced that its revenue last year reached 46.8 trillion won ($44 billion), an 18.5 percent increase from a year ago, while operating profit rose 0.2 percent from the previous year to 3.2 trillion won.

Both figures were all-time highs for the company. SK Innovation remains the only refiner in the country to reap 3 trillion won in operating profit, which it has enjoyed for two consecutive years. Net profit surged 28.6 percent year on year to 2.2 trillion won.

The company attributed its success to its non-refining businesses, which exceeded operating profit of 2 trillion won for the first time last year, hitting 2.07 trillion won. At the fore was its so-called deep change initiative where the company restructured its business portfolio and profit structure.

According to SK Innovation, operating profit from chemicals and lubricants accounted for 49 percent of profit in 2015 and exceeded 50 percent for the first time the following year.

Last year, operating profit from these two businesses accounted for 64 percent of the total. Revenue from chemicals reached an all-time high of 9.3 trillion won last year, while operating profit reached a record 1.38 trillion won.

The lubricant business was second-highest in operating profit at 504.9 billion won. The current record, remains 2011, when profit from lubricants reached 509.6 billion won.

“Last year was a year where we created a portfolio that could generate stable and outstanding results that can be sustainable in our non-refining business by pushing through with our deep change [agenda],” said Kim Jun, CEO of SK Innovation.

“This year, we will continue to push harder on our deep change with the mind of a blue ocean shift by creating new markets through separating from the existing customs and therefore creating a platform from which we will be working toward a 4 trillion won operating profit.”

SK Innovation said it has been focusing on chemicals and batteries, constructing its first overseas factory to produce electric car batteries in Hungary. The project was announced last November.

The company also saw its refining business grow, recording revenue of 33.3 trillion won last year, up 17.5 percent compared to the previous year, thanks to an increase in crude prices.

However, operating profit fell 8 percent to 1.5 trillion won due to higher management costs.

The refiner decided on Wednesday to hand out dividends of 8,000 won per share, which would amount to 745.6 billion won. This is the biggest payout the company has ever offered.